Inefficient bank boards and the failure of auditors to understand the ‘ever-greening’ problem added to bad-loan mess, says the survey.
The countdown to the Union Budget 2021 has kicked off and for few days, all eyes will be on FM Nirmala Sitharaman. This year's budget holds crucial importance to India's economic growth, considering the massive damage the coronavirus pandemic has done.
Before the D-Day, here's a lowdown of all the basics you need to know about the Union Budget of India.
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What is a Union Budget and some other basics:
Similar to how one would make a monthly budget for their households, the Union Budget is a constitutionally-mandated annual exercise carried out by the government. The government basically makes an estimate of revenue and expenses for the forthcoming fiscal/ financial year- 1 April one year to 31 March of the following year.
When is it presented?
The budget is presented during the month of February so that it can be discussed & materialized before the beginning of the fiscal year. Since 2017, the Union Budget has been presented on the 1 February every year, as it would be this year as well. This year's budget will take effect from 1 April 2021 and last till 31 March 2022.
Who presents it?
The Finance Minister tables the budget in the parliament.
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Classification of the budget:
India's Union Budget can be broadly classified into two parts- revenue budget and capital budget.
Revenue Budget: The revenue budget enlists everything that is more short term in nature. It includes both revenue receipts & revenue expenditure. Revenue expenditure refers to the regular expenses incurred from the daily functioning of the government as well as for the range of services offered to the public. Revenue receipts include- income tax, excise duty, corporate tax, fines, profits, etc.
Capital Budget: The components of the capital Budget on the other hand are more long-term in nature. It includes capital expenditure and capital receipts. Capital expenditure comprises costs incurred on the development and maintenance of equipment, machinery, health facilities, building, education, etc. Capital receipts include-
loans from citizens, RBI, and foreign governments.
When the government's expenditure is greater than the total revenue collected, a state of fiscal deficit occurs.
The annual financial statement is the core of the budget, it is the main budget document. It shows the receipts and payments of the government under three major accounts-
1. Consolidated Fund: This account gives a record of all loans raised by the government and receipts from recoveries of loans granted by it. Every government expenditure is incurred from this fund only and no amount can be withdrawn without authorization from Parliament.
2. Contingency Fund: This fund acts as a contingency resource to meet urgent or unforeseen expenditure pending authorization from Parliament. At present, the corpus of the fund is at Rs 50 crores.
3. Public Account: This is a record of those transactions in which the government behaves as a banker- transactions relating to provident funds, small savings collections, other deposits, etc. The money thus received is kept in the public account. Parliamentary approval for using the money in this account is not required, as the money doesn't belong to the government and needs to be repaid.
The Union Budget aids the Government of India to analyze the problems of the past fiscal year and accordingly bring out solutions that will result in the fast and all-inclusive economic growth of our country. Not to mention, it helps the government to carry out its constitutional duties of social justice and equality. Some objectives of the Union Budget are-
- To allocate resources optimally for public welfare.
- Generating employment to reduce poverty levels, and create programs for the basic needs of every citizen- education, food, healthcare, etc.
- To maintain economic stability by controlling inflation and deflation.
- Bringing about changes in tax structures to benefit the economic growth accordingly.
Also Read: The team behind Union Budget 2021-22
